We live in a society of instant gratification. We want what we want and we want it now. The practice of saving and waiting can be an unnatural and difficult process; however, it important to establish a consistent savings habit. Stop putting it off and start saving for unexpected expenses and future goals. It is the foundation of good money management and a stress eliminator.
Save for an Emergency
Unfortunately emergencies happen. Cars break down, pipes burst, or other unexpected expenses can occur. Instead of waiting for these bad things to happen, prepare yourself so that you are ready when these bad things inevitable happen. Set up a emergency fund account and contribute a small amount each month until you have at least $1000 saved up. Ideally you should save at least three to six month of expenses.
Save for Retirement
Having insufficient savings for retirement may force to work longer than you want to. In order to be able to enjoy your golden years, put money aside each month for retirement. A lot of employers offer matching funds, so you should at least contribute the minimum amount to be eligible for matching. Ideally, you should contribute 10 to 15% of your monthly income, but even a small amount each month can really add up over a 20 to 40 year career.
Save for “Wants”
If you plan on getting married, going on vacation, or making a “big” purchase like furniture or electronics you should save up the purchase amount rather than paying interest to a credit card company. You are also in a better position to negotiate if you have cash saved up. Additionally, saving up for a down payment for a car or a home can help you getter better interest rates.
Build Your Savings
One way to make saving easier is to have a portion of every paycheck automatically transferred or direct deposited into a savings account so you do not have to think about it. Another way to build savings is to add extra money, such as tax refunds, reimbursements, raises, and bonuses, to your savings account rather than spending it right away. Starting a consistent savings habit is not easy, but it is important to ensuring financial security in the future